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(February 07, 2003) -
- In January, the economy created 143,000 net new jobs. This resulted in a 3/10 of a percent drop in the unemployment rate to 5.7%. Although the number was skewed by seasonal factors in retail, the markets took a breather from their three day nose dive.

"The increase in payroll jobs, mostly in the retail area, was the largest since November 2000, said Friday's Labor Department report. The overall rate dropped by 0.3 percentage point from the 6 percent rate in December that matched an 8-year high.

Analysts had expected the unemployment rate to hold steady at 6 percent for a third straight month, with a more modest increase in payrolls.

The surge in new jobs was concentrated in stores, restaurants and bars last month, which added 101,000 new positions. Economists had predicted that retail hiring would pick up because holiday employment was well below normal. This meant that fewer seasonal workers were laid off in January.

The job growth marks a major improvement over December, when businesses cut 156,000 jobs, according to revised figures."
- From The Associated Press

We're not prepared to say that this is the beginning of the predictable downward trend. That may well wait until after the war question is settled and behind us. But a couple of things are well worth understanding.

First of all, the unemployment rate is compiled through a series of surveys. It makes a huge range of assumptions about what constitutes work and being available for work. It's more like a wind sock at a small airport than it is like a precise wind-speed indicator at a large one. There is more than enough inaccuracy in the estimating methodology to allow for huge swings in the number. 

Secondly, the size and structure of the workforce is changing as we speak. The relentless onward march of time is bringing baby boomers ever closer to retirement. Our elderly workforce is aging and shrinking. 143,000 new jobs in a month is nothing like what will happen when the daily exodus to retirement reaches 10,000 people per day in a couple of years. 

There are 76,000,000 baby boomers at work. The oldest is 59, the youngest is 39. Some turn 60 this year. They will all be older than 65 in 25 years.

Let's assume that they retire at a completely level rate over the course of those 25 years. That would be, roughly, 260,000 empty jobs a month (or, if you're following the math, nearly twice the number of new jobs created in the current unemployment figures). Unfortunately, we are not manufacturing new workers fast enough to keep up with the attrition.

The only good news about the past couple of years of economics is that the markets are keeping people past their early retirement age. There are, roughly, 5,000,000 workers who are staying on past their retirement eligibility dates (Remember, in the government that number is already nearing 20% and is expected to hit 50% within four years).

We're not at all sure that this particular drop in the figures is a signal that the inevitable decline is hear. But watch out.

Once unemployment begins its predictable steady decline, it will rapidly head towards zero. The difference between today's 5.7% and 0% is only a couple of years of baby boomer retirements.

We're certain that a central feature of the employment landscape will be building a company that people want to work for. We imagine that, shortly, there will emerge a new alternative to the highly promoted 100 Best Places to Work. It will be those companies that are the best places to want to work. The game will shift from sifting and sorting through piles of resumes to figuring out how to attract the right people. In many sectors and geographies, it already has.

- John Sumser  

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Materials written by John Sumser © TwoColorHat. All Rights Reserved.
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